Felix Salmon

I’m experimenting with adding a bit of video to this here blog, do you think it’s a good idea? Here’s a couple of bite-sized snacks I recorded this afternoon: the first one’s on why it’s a good idea to get out of the stock market right now, and the second one’s on Greece, and how it’s a harbinger of other sovereign debt crises to come.

Bloomberg’s Nina Mehta and Chris Nagi have an excellent explanation of the role of fragmented exchanges in yesterday’s market crash. The upshot is that something which was meant to make trading safer in fact made it more dangerous, just like portfolio insurance in 1987. And the background is the way in which the big two exchanges just aren’t as big as they used to be, at least on a relative basis:

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Ah, volatility. Suddenly, at 2:30pm this afternoon, the US stock market decided it was going to fall off a cliff, and the Dow promptly proceeded to drop about 700 points in the space of mere minutes, before bouncing back up. This is pure market craziness: if any journalist tries to blame “worries about Greece” or anything like that, ignore them — insofar as there’s a simple explanation, it’s probably something to do with a dodgy feed on Procter & Gamble’s stock price, which fed directly into the Dow, and caused a brief spell of utter panic.